What Is the Most Important Contrast Between the Expectations Theory

Multiple Choice

What is the most important contrast between the expectations theory and the segmented markets theory?

A) The segmented markets theory states that investors view similar instruments that differ only with respect to maturity as perfect substitutes.
B) The expectations theory states that investors view similar instruments that differ only with respect to maturity as perfect substitutes.
C) The expectations theory does a better job of explaining why yield curves are usually upward-sloping.
D) The segmented markets theory does a better job of explaining why the yields on bonds of different maturities tend to move together.